In May of last year, we described the Finnish apartment ownership system very briefly. We explained that apartment ownership in Finland is organized through limited liability housing companies. In this blog, we’ll explain what happens in the annual meeting of a Finnish limited liability housing company.
Finnish limited liability housing company
When you buy an apartment in Finland, you are not actually buying property but you buy shares in a limited liability housing company. The shares allow you to live in and manage the apartment connected to those shares.
The Limited Liability Housing Company Act of Finland regulates the governance and decision-making of limited liability housing companies in Finland. The Act includes requirements for example for bookkeeping, annual accounts, and auditing. The Act also has specific requirements for the annual meeting of a limited liability housing company.
This is the time of the year these housing companies start having their annual meetings. The law stipulates that the annual meeting has to happen within six months of the end of the company’s fiscal year. In most companies, the fiscal year corresponds with the calendar year. Thus they have to have their annual meetings by the end of June.
The annual meeting of a limited liability housing company
The annual meeting of a limited liability housing company is the company’s primary decision-making body. Shareholders themselves make the decisions in the meeting.
The annual meeting decides all issues related to the housing company unless the Act or the by-laws of the housing company state otherwise. They may have transferred some issues for the board to decide.
If you own an apartment, you really should participate in the annual meetings. These meetings are your opportunity to learn what’s going on in the building. You’ll learn how the building is maintained and what new repairs might be coming. You’ll find out where the company’s money goes to. More importantly, it is where you can have a say in the decisions.
Primary topics of the annual meeting
The primary topics shareholders discuss and decide at the annual meeting of a limited liability housing company have to do with finances and with accountability.
The meetings have a standard format. However, the discussions in the meeting tend to meander. It depends on the chairperson of the meeting how well he/she is able to focus the discussions on the topics at hand.
The meeting starts by selecting a chairperson and other meeting officials for the meeting. It is very common for the board of the housing company to serve as the chair. The property manager often takes the minutes.
The topics themselves fall into two categories. Some issues are discussion items only and some are decision items.
Discussion items include the different reports from the last fiscal year and the repair plan for the next five years.
The shareholders decide how much the maintenance and other charges will be for the following year. They also decide how much money they will allocate for the different running costs. They decide what repairs or preparations for repairs will be done or started in the next year.
The shareholders will decide who will be on the board of the housing company for the following year. They also check the previous year’s accounts and decide whether the previous board has acted responsibly.
Who can participate in the meeting
All shareholders can participate in the meeting. Shareholders should receive a written invitation to the meeting at least two weeks before the meeting. Sometimes company by-laws allow for a shorter notification period.
The invitation should include not only the time and place of the meeting but also the agenda.
As we said, shareholders really should participate in the meeting. If you feel that you need assistance with the matters themselves or with understanding Finnish, you can bring someone with to assist you.
You can also send someone to represent you. In that case, you have to issue a power of attorney to that person. Make sure that the power of attorney details the limits of the powers you give your representative. Also, make sure that your representative knows how you want him/her to vote on in any given issue.
Tenants in larger limited liability housing companies can also participate in the annual meeting if the topics include the regulations of the housing company, the use of common areas, or repair work that will significantly influence the use of the tenant’s apartment or of common areas.
Tenants can participate in the discussions but they do not have the right the vote. The housing company should notify the inhabitants of the housing company either in the notice boards or by notifying each apartment separately when these issues are on the agenda.
Preparing for the meeting as a shareholder
In many cases, shares in a limited liability housing company are the most valuable asset a person has. Thus the way in such an asset is managed is not a small matter. The only way you can influence is by participating in the meeting.
Before the meeting, you should familiarize yourself with the board’s suggestions for decisions, the balance sheet, and the various required reports. If you don’t receive these together with the invitation, it should state you can view these documents. Usually, they are available for viewing at the property manager’s office during their office hours.
One of the most important things discussed in the meeting is the mandatory repair and maintenance plan. This plan gives you an idea of what types of repairs might be coming and how big of a financial burden they’ll place on the company and its shareholders. This will give you an indication of whether your housing costs will go up noticeably in the near future. Also, if some necessary repairs are not mentioned in the plan it should give you pause. Why are things not being repaired?
Familiarizing yourself with last year’s balance sheet tells you where your money is going and how the costs have changed from the previous year. If there are marked changes in the costs of, say, heating or water cost or in some repair costs you might want to know why. Such changes can indicate problems.
And so on.
These annual meetings are usually not much fun. Hopefully, we have been able to show why participating in them is still important.
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